Jamal Khashoggi was killed by Saudi agents at the Saudi consulate in Istanbul on October 2 [File: Hasan Jamali/AP]

The fund given by MBS to US talent agency Endeavor last spring was aimed at diversifying the kingdom's economy.

A Beverly Hills-based talent agency, Endeavor, has returned a $400m investment fund to Saudi Arabia and cancelled its contract with the kingdom over the murder of journalist Jamal Khashoggi, the New York Times reported.

The fund was given to the firm's chief Ariel Emanuel during a high-profile Hollywood party last spring, which brought together Saudi Crown Prince Mohammed bin Salman (MBS), Disney chief executive Robert Iger and Amazon founder Jeff Bezos, among others.

The money was meant to fund the growth of Endeavor and diversify the kingdom's economy through the agency's work in various industries, including sports and film production.

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But following the murder of Khashoggi, the firm returned the fund, protesting the murder, and effectively ending its relationship with Saudi Arabia, according to two NYT sources with knowledge of the deal.

The move came months after several international companies, including Uber and Goldman Sachs, cancelled plans to attend an investment conference in the Saudi capital, Riyadh, in October last year.

It also followed Richard Branson, founder of the British media and technology conglomerate Virgin Group, suspending talks with Saudi Arabia over potential investment in his business ventures, the NYT reported.

During a tour of the United States last spring, MBS met a number of US politicians and business leaders, seeking deals to develop Saudi Arabia's Public Investment Fund and reduce the country's dependence on oil.

During the trip, he signed deals with film theatre company AMC and amusement park operator Six Flags to expand into the kingdom and promote its entertainment industry, reported the NYT.

Khashoggi, a Washington Post columnist and critic of the Riyadh government, was killed at the Saudi consulate in Istanbul on October 2.

After weeks of repeated denials that it had anything to do with his disappearance, the kingdom eventually acknowledged that its officials were behind the murder. The whereabouts of his remains are still unknown.

According to Turkish officials, Khashoggi's body was cut into pieces, which were then likely burned in an outdoor furnace in the garden of the consulate general's residence, about 300 metres from the consulate.

Khashoggi's death and the following cover-up led to discontent in Washington over Saudi Arabia's human rights record.

On Thursday, some US senators challenged President Donald Trump's nominee to the post of US ambassador to Saudi Arabia, to take a tough line on human rights and other abuses it the kingdom.

The senators accused the kingdom of a litany of misdeeds and one senator criticised MBSas going "full gangster".

Last month, the House of Representatives passed a resolution that would end the US support for the Saudi-led coalition in Yemen, a strong rebuke for Riyadh.